China’s Exports Surge 46%
China’s February exports rose nearly 46 percent compared with the same period last year, to $94.5 billion, beating most expectations, officials announced Wednesday. China’s export figures last month are all the more impressive given the fact that many businesses shut down for a week for the nation’s Lunar New Year.
Overall for the month, China held a $7.6 billion trade surplus with the rest of the world, much of which was driven by the Asian nation’s trade surplus with the U.S.
The better than expected export report, however, could cause other nation’s to demand that China allows its currency, the yuan, which has been pegged to the dollar for 18 months, to appreciate to appropriate levels.
China is the world’s most well-known practitioner of currency manipulation. A recent study by the U.S.-China Economic and Security Review Commission found that China’s currency may be undervalued by as much as 40 percent.
The practice has allowed China to gain a competitive advantage on the U.S. in international trade. The last time the U.S. and China had a balanced trading relationship was in 1985. Since 2005, Americans have spent $1.1 trillion on Chinese products; Chinese consumers have bought just $272 billion worth of goods over that same time.
Allowing its currency to rise in value would help boost U.S. exports and create American jobs. At the same time, it could slow job growth in China, which could lead to social problems. Given that, many believe that Beijing will be extremely hesitant to allow yuan to float freely, and if they do, it will be an extremely slow process.
“Even if China starts to appreciate, the possibility is it will be very slow and gradual, without an immediate impact on trade,” Nicholas Consonery, an analyst in Washington for Eurasia Group, told The Associated Press.
The Obama administration and its Treasury and Commerce Departments have repeatedly failed to properly tackle the issue despite often issuing vows to get tough on China for the practice. Recently, however, the administration has struck a much bolder tone on the subject, suggesting that action may soon be taken on the illegal Chinese trading practice.
Not only that, but pressure is also mounting in Congress, where numerous pieces of legislation designed to counteract Chinese currency manipulation have been introduced. Most recently, a bipartisan group of 15 Senators representing 11 different states called on the Obama administration and the Commerce Department to do more than pay lip service to combating the well-known Chinese practice.
China’s continued export growth may provide the impetus needed for the administration to take the issue more seriously, and will certainly provide opponents of the practice with more ammunition.
“The strong export recovery should provide support for those who advocate for a resumption of RMB appreciation,” said Tao Wang, head of China Economic Research for UBS Securities, in a report released Wednesday.
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